[1] Spot RUB per one USD = 56.8139; one-year RUB interest rate = 7.75%; one-year USD interest rate = 1. Answer with True or False: The two-year…

[1] Spot RUB per one USD = 56.8139; one-year RUB interest rate = 7.75%; one-year USD interest rate = 1.75%. Answer with True or False:

a. The two-year forward exchange rate is RUB per one USD 63.119

b. The one-year RUB forward discount is 5.57%

c. The RUB is a premium currency because F > S

d. Both the spot and the forward rate are quoted European style

[2] Three months ago, Bank C bought 170 contracts of April 2018 short-term interest rate futures at a price of 98.20. The contract expires today, and the spot short-term interest rate is 2.35%. Answer with True or False:

a. Total profit USD 233,750

b. Profit per contract USD 1,375

c. Total loss USD 233,750

d. Loss per contract USD 1,375

[3] The March 2018 USD per one RUB contract trades at 0.01970 (contract size = RUB 2,500,000). The March 2018 USD per one EUR contract trades at 1.2030 (contract size = EUR 125,000). A trader who wishes to take a Long March RUB/Short March EUR position with a neutral view on the USD should use the following hedge ratio:

a. 3 RUB contracts per 1 EUR contract

b. 1 RUB contract per 3 EUR contracts

c. 1 RUB contract per 1 EUR contract

d. None of the above

[4] Spot USD per one GBP = 1.4165; one-year GBP interest rate = 3.50%; one-year USD interest rate = 1.75%. Answer with True or False:

a. The one-year forward exchange rate is GBP per one USD 0.7181

b. The one-year forward exchange rate is USD per one GBP 1.4409

c. The one-year forward exchange rate is USD per one GBP 1.3925

d. The one-year forward exchange rate is GBP per one USD 0.6940

e. The British pound trades at a forward discount to the US dollar.

f. The British pound trades at a forward premium to the US dollar.







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